Gillette Co has bought a majority share of one of China's largest battery producers, which is currently a major rival of Gillette's in the Chinese market.

Gillette, manufacturer of the world's top consumer battery brand Duracell, has taken over a controlling stake of up to 70 percent in Fujian Nanping Nanfu Battery Co Ltd, according to an official with the Chinese company who prefers anonymity.

The move is likely to give the US-based consumer product heavyweight a dominant position in China's battery market since Nanfu accounts for more than 40 percent of China's alkaline battery market in terms of sales volume, said industry insiders.

"Gillette is seeking all the stakes from our overseas shareholders but the domestic shares which are between 20 and 30 percent of the company will remain (domestically held) at the moment," said the official, who declined to reveal how much was paid for the share transfer.

He said he's not sure whether the remaining stakes will also be sold to the US company in the future.

Founded in 1988, Nanfu became a joint venture in 1999 by acquiring money from overseas investors bas-ed in the United States, Singapore and the Netherlands, among other countries.

Officials with Gillette (China) Investment Co Ltd didn't reply to an interview request yesterday.

Gillette told the Reuters news agency that the takeover will increase its profits this year.

Some industry insiders wondered if there is a hidden reason behind the acquisition of Nanfu, which has been China's top-selling alkaline battery for about 8 years. Nanfu, however, downplayed the speculation.

"There are no troubles with our business operations and we have enjoyed solid growth these past years. It's just about a share transfer from some investors to another," the official said.

Nanfu reported revenues of around 700 million yuan (US$84.34 million) and a net profit of 99.07 million yuan last year.

As Nanfu is a major rival for Duracell, which is a market leader across the world but has struggled in China, some in the industry wonder if the Chinese brand will disappear or be merged with Duracell.

"The two have their own product features and brand value. I guess Gillette won't kill or merge the Nanfu brand since Nanfu has a number of loyal customers in China," said Miao Xiushu of Shanghai White Elephant Swan Battery Co Ltd.

In the early 1990s, foreign battery products like Duracell and Energizer accounted for more than half of the Chinese mainland alkaline-battery market.

Nanfu and other domestic battery brands have grabbed market share from the foreign giants in recent years by offering similar quality products at lower prices.
 
(eastday.com August 22, 2003)